SYED ZAHEER AHMED, REGISTRAR OF COMPANIES.--1. On the application of one of the Directors of M/s. Hyesons Sugar Mills Limited, the Company was directed under section 170 of the Companies Ordinance, 1984 to hold all its over due annual general meetings i.e, for the years 1985-86 and 87 and to lay there-at and pass its annual accounts for the years ended 30th September, 1984, 30th September, 1985, and 30th September, 1986 respectively, which for some reasons or the other could not be held and passed in time, within 90 days vide CRO, Karachi letter No. 1310/Com./87/972, dated the 2nd December, 1987. By virtue of that direction the company was required to hold all its three annual general meetings and pass the relevant accounts by 2nd March, 1988 positively.
2. The company did call the meetings for all the three years on 16th February, 1988 but could hold the meeting for the year 1985 only in which' the relevant accounts ended 30th September, 1984 were presented and passed. The other two meetings for the years 1986 and 1987 stated to have been adjourned were held on 19th February, 1989 much beyond the given time violating the direction given under section 170 of the Companies Ordinance, 1984, The Company thus committed an offence under section 171 ibid.
3. After giving a show cause notice to the Company the case was fixed for hearing at Karachi on 7th July, 1990 to adjudicate penalty for the offence as provided under the law. On that date the case was got adjourned by the Advocate of the Company for 9th July, 1990 as he was busy in some other case in the "High Court on that day. On 9th July, 1990 Mr. Farid-ul-Haq and Mr. Muhammad Waqar-ul-Haq, Advocates, appeared on behalf of the Company alongwith Secretary and General Manager of the Company. At the very outset Mr. Farid-ul-Haq argued that all the three meetings were called within the given time but the meeting for the year 1985 only could be held in which accounts ended 30th September, 1984 were presented and passed. He further stated that the meetings for the years 1986 and 1987 were adjourned by the Members which were ultimately held on 19th February, 1989. It was argued that all the three meetings were called within the given time but for some reasons the Members adjourned the meetings for the years 1986 and 1987 which were ultimately held on 26th February 1990 and thus the Company did not commits any offence as the Members had powers to adjourn the meetings under section 169 ibid. It was also- argued by him that the direction given under section 170 ibid were of directory nature and not mandatory, therefore, the meeting could be adjourned by the Members of the Company.
4. The matter has been considered. The arguments of the Advocate are not tenable. A meeting held under sections 158 and 159 ibid under the normal course can be adjourned by the Members but no meeting called in pursuance of direction given under section 170 ibid could be adjourned, beyond the given time without the permission of the competent authority. Direction given under section 170 ibid had to be followed by the Company strictly in accordance with the direction given because failure to do so entailed liability under section 171 ibid. Section 170 ibid is a special provision designed to put the Company on rail after having failed to hold the annual general meeting in the normal course notwithstanding anything contained in the Companies Ordinance, 1984 or in the Company's Articles of Association. Therefore, in compliance with the direction given under section 170 ibid the company was neither required nor could it take advantage of any other section of the Companies Ordinance. The Company was therefore, required to .Act strictly in accordance with the direction given to it. The direction to the company was given to hold all its over due meetings and lay there-at and pass its relevant accounts within the specified period. Since the Company acted against the direction given in the case of the meetings for the years 1986 and 1987,1 have no hesitation to hold that the Company violated the direction given under section 170 and thus it is liable under section 171 ibid.
5. Looking all the aspects of the matter impose a lump sum penalty of Rs. 5,000/- (Rupees five thousands only) on the Company for violating the direction given under section 170 ibid in the case of meetings for the years 1986 and 1987. The Chief Executive of the Company is directed to pay the amount of penalty in the relevant Head of Accounts of this department within 15 days from the date of this order in the Government treasury through challan and submit receipted original challan in this office in proof of the payment.